Qatar, Saudi Arabia, UAE Power Sector: Upbeat Outlook

Qatar, Saudi Arabia, and the UAE will remain the most compelling power sector investment destinations in MENA, in our view. Capital formation will be driven principally by government infrastructure spending plans, as demand for electricity surges in line with strong economic and demographic fundamentals. These countries offer relatively low risks and high rewards.

Three Key Themes

Huge Expansion Plans: All three countries are advancing huge expansion plans. Saudi Arabia has plans to double installed power capacity by 2020 and hopes to draw USD109bn in investment into the power sector through to 2032. Qatar is planning to boost its power sector in the run up to the 2022 Football World Cup.

Cannibalisation Of The Economic Base Drives Diversification: With demand for power growing so fast, these hydrocarbon-based economies are caught between burning their own oil and gas reserves domestically for power generation or saving hydrocarbons for lucrative export. To the upside, this dynamic gives energy mix diversification plans added impetus. Saudi Arabia, for example, wants to maintain its outsized role in the global oil markets and is advancing some of the most ambitious nuclear and solar expansion plans in the world in order to preserve its oil for export. Solar power is being used to power energy-intensive processes like desalination and enhanced oil recovery.

A Growing Focus On Energy Efficiency: Major investment in energy-efficient grid infrastructure is another key feature of these markets, aligning with the wider aim of cutting energy consumption and retaining hydrocarbons for export. Better grid infrastructure will also allow for the interconnection of GCC countries – enabling them to export and import electricity from one another at times of peak demand. For example, Egypt and Saudi Arabia are advancing plans for an underwater connection, so they can trade electricity.

Last week's questions were as follows: What (fairly mundane) qualification have 70,000 Chinese citizens acquired in South Korea over the last three years, because it is easier and cheaper than back home? And, on a separate note, which major political leader recently appeared at an election campaign in the form of a giant hologram? The answer to the first part is straightforward enough: driving licenses. The answer to the second part is Turkish Prime Minister Recep Tayyip Erdogan.

This week's question is as follows: what long-forgotten objects are intended to be excavated from a burial site in New Mexico, USA, towards the end of April, having been interred there for more than three decades?